Speculation against Italy, the Financial Times alarm. The ace in the hole, according to analysts

Fragrance of speculation on the tricolor spread, which now appears to be ‘special observed’ again. The biggest bet against Italian debt since the 2008 global financial crisis would come from hedge funds, the thesis defended in an article on the Financial Times website. Investors are concerned about the difficult political situation, Mario Draghi’s imminent departure from Palazzo Chigi, and growing economic challenges. And the country’s dependence on Russian gas imports is worrying.

According to the British newspaper, hedge funds borrowed bonds betting their prices would fall by an amount equivalent to about 39 billion euros, the highest level since January 2008 until August, based on S&P data. Global Market Intelligence. In short, investors would bet on falling prices, at a time when the country faces increasing setbacks in the economic field with the increase in European natural gas prices caused by cuts in Russian supply and with a tense political climate with the elections scheduled for September. .

“It’s the most exposed state in terms of what happens to gas prices and politics is challenging,” said Mark Dowding, chief investment officer at BlueBay Asset Management, which manages approximately $106 billion in assets. The fund is short selling Italian 10-year bonds using derivatives.

Analysts and experts comment to LaPresse on the Financial Times article expecting a mass breakout in Italian stocks. And they appeal to the memory of the recent past. It was August 5, 2011 when the ECB ‘sent’ the letter in which Europe told the then Berlusconi government how to behave to avoid default. And speculation began, in the form of a frontal attack on sovereign debt, yields on government bonds soared, the spread exceeded 550 basis points. And the government fell.

Eleven years later, for Alessandro Berti, associate professor of banking and corporate finance at the Faculty of Economics at the University of Urbino Carlo Bo, “a possible sovereign debt crisis was to be expected after some parties suddenly discouraged the Draghi government and led the country to early elections. But I believe that Europe and the ECB are capable of limiting the damage of this downward speculation in a much more coordinated and effective way than in the past. The Next Generation I prove it”.

“It is a question – Berti continues – of understanding what can happen after the vote on September 25, but as President Mario Draghi recalled at the Rimini Meeting, our deficit/GDP ratio has improved, unlike other European countries” and ” Nobody wants to question the credibility achieved by Italy, not even Fdi and Lega, who seem much more lukewarm in sovereignty.” According to the expert, “one can look with relative tranquility to this possible ‘sovereign debt crisis’ that has arrived in Italy thanks to the fact that the Berlusconi government does not have the capacity to do what was necessary”.

For Gianclaudio Torlizzi, founder of the financial consultancy T-Commodity, “the alarm of the FT should not be underestimated”, but also “the interest of some circles in catalyzing attention on Italy when, on the other hand, critical issues also concern other European countries, mainly Germany, whose trade balance was negative for the first time since 1990 due to the energy crisis”.

The yield differential between the ten-year Italian BTP and the German Bund, in the last few weeks until the last few hours, reached 230 points several times, with the State paying around 2% more than the German to finance itself in debt markets. Today, however, the spread closed down 223 basis points and, with the Italian 10-year yield at 3.55%, appeared unmoved by the FT’s warning of market skepticism, having reached the highest levels in the two last sessions, from the end of July.

Source: IL Tempo